On July 3, Bob Diamond was officially cast as the rot of the City: the embodiment of greed.The-Teflon coated politicians, revolting shareholders and socialist tabloids went into overdrive, and every anti-capitalist, anti-employment protester cheered so loudly they almost dropped their fat-free, caffeine-free, offence-free soya latte on their sandals. Diamond, the comically overpaid CEO of Barclays, was finally ousted from power.
But, Barclays had spent 15 years grooming him to take over – they must have seen something in their “wholly unsuitable” leader? There is no doubt that Diamond remained hugely popular in key circles. He was an entrepreneurial banker – arguably the best in the world – who steered Barclays through the worst global financial crisis without the need for a government bailout and engineered the acquisition of the largest chunk of Lehman Brothers after they went bankrupt. He drove profits and assets which, since his takeover in 1997, grew twelve and five times respectively. Moreover, he was lauded by his staff. One former colleague stated: “He engendered loyalty right through the ranks.” But Diamond’s pay reward – and that of CEOs of other major companies – has been the subject of immense scrutiny and vilification, marking him (indeed, them) as public enemy number one. It is estimated – and well reported – that Diamond has earned £120m over the past eight years. Less well reported is the 25 per cent he gave away to charity, or the fact that his package was received with him having driven profits in BarCap to £3bn (contributing to 79 per cent of Barclay’s Group profits). And yet, bright, ballsy business leaders like Diamond have become scapegoats, more hated and scrutinised than a Premiership footballer on a seemingly indefensible race charge (but still earning significantly more than top directors for barely 20 hours per week “work”). What many seem not to grasp is that company CEOs are irreplaceable, making their rewards just in recompense for effort and success. In the current climate – and especially at Barclays, the hottest of political hotbeds – there is not an overwhelming desire to throw oneself to the lions, but those that do, and do so successfully (businesses within the FTSE 150 account for circa 90 per cent of the market capitalisation of the London Stock Exchange), deserve to be well rewarded (or should that be compensated?). As in many other professions, the need to have the best talent – a need which, during tough economic times, is greater than ever – means offering premium rewards. Far from vilifying and ousting the brightest C-level executives, we should be encouraging them to stay at the helm of our companies through remuneration which is performance related and motivational. The Diamond geezer should have remained Barclays’ bobby dazzler. Gary Chaplin is managing director of Communicate North.
Share this story